Summary of Trustee's Update in A&O Bankruptcy: It's a Mess
Here is the bankruptcy trustee's initial report in the A&O debacle. It details irregularities and problems that observers of A&O have come to expect. Some of the noted problems include:
- many of the A&O policies have lapsed.
- there are ownership disputes with many of the policies that haven't lapsed. This means that A&O may not really own the policies.
- Provident Capital probably is not going to pay on the bonds that were supposed to back up the policies.
- there was a bait and switch pulled on investors: they were told that they were getting one type of investment, but actually got something else.
The trustee's website is a great A&O resource and there is not much that I can add from an information standpoint.
From an opinion and commentary standpoint, I am impressed with the efforts of the trustee. If I was an investor I would support the current trustee based on the information that I have seen.
As far as blame, do not buy into Russell Mackert and A&O's attempt to blame this debacle on Prestige Title and Stephen Colson. They are using Prestige and Colson as scapegoats. All indications are that the interpleader case that froze Prestige's funds accelerated A&O's demise rather than caused it. All you really need to know about A&O is that the founder (Adley Abdulwahab) lied about his education in touting A&O as a legitimate enterprise. If this is not evidence of a con man, then I do not know what is.
If I were an investor who has not yet hired an attorney, I would be looking for an attorney who is willing to file suit against the agent who sold me the investment. I continue to believe that agents' errors and omissions policies are the best hope for recovery. In addition, if the government prosecutes and recovers funds in the case, then there could be an avenue for the victims to recover losses from the government. Finally, Russell Mackert and any insurance coverage that he carries could also be a potential target if, as expected, it turns out that the A&O sale to Blue Dymond turns out to be a sham.
Who would even think of using a title company that's run out of an attorney's office, to place $4.6 million dollars supposedly escrowed to pay SOME of the premiums of a company with over a hundred million dollars in sales? Tell me Mr. M why you had to travel out of state to find an attorney to escrow the money when there are plenty of attorneys in Houston. Did you have a falling out with Mr. Spalding since he obviously enjoyed his relationship with the DUO then TRIO? Did he or the SENIOR escrow agent refuse to do it this time? Or did you snub him and is that why he's willing to throw charges at you. Of course he knows it's unlikely you'll reveal him because you'll jeopardize yourself. It makes him look better especially when his all of a sudden ex-law firm continues to recruit investors so the investors hold the Spaldings harmless-thank God for the American legal system (I'm still hoping for the FED calvary anytime soon). You won't see me signing with "which rhymes with Bitchie!" Understand this, $4.6 became ~$2.5 million in one year and the $2.5 would be lucky to last the year as many more of the policy premiums were set to explode. What a joke, Mr. M, for suggesting the escrow would last six years. Even your old escrow company, I mean Mr. Spalding, states you should have escrowed $12 million- although I think that's way too low. I know just ONE of the policies should have had more than $3 million dollars alone besides the escrowed premiums which would have accounted for most of the entire escrowed amount. So $4.6 million is SQUAT! Mr. M must have realized that he needed to devise a plan with another SIMILAR lawyer (Mr. C with over $13 million dollars in claims) in order to point the finger away from Mr. M. Like Sacramento, PCI was never going to pay off and Mr. M knew it. Mr. M also knew there wasn't enough money to even pay the premiums to keep the policies afloat till term because TOO many took TOO much and there wasn't enough left (sounds like a PONZI scheme to me). The F. TRIO plus Mr. M needed someone that knew how banks operate-maybe someone like the other Mr. W, who worked for Chase before he was handpicked for his obvious banking experience. I wouldn't be surprised if the other Mr. W worked at the same branch where Mr. Spalding did his banking since Bayou City accounts were at Chase as well. An banking insider could be adept at making it difficult for authorities to track the money by sweeping clean the money trail.
Someone might look for attorney firms that run businesses out of their office besides Mr. C with Pretige Title, like Spalding's Bayou City Escrow, Inc. or like GlO-CPAs in the same office as Glaw, Londergan, and O'Neill (Oh, I see GLO). Mr. M, I will SCREAM if you mention one more time that GLO performed an audit. READ the GLO report-even a non-lawyer can read it, it says they didn't perform an audit-they simply said that the numbers that management showed them were deposited-they did not wish to express an opinion on compliance because either you would be very upset or they would be sued. Mr. M , you couldn't remember a full name of any accountant that you let inspect all of the records entrusted with you?
I like how Mr. M states he noted irregularities at Prestige Title in March of this year when he knew full well that many of the policies had NO premiums paid for several months. Did Mr. M think in his legal opinion that it was OK to ENCUMBER our investments by loaning the cash value to pay the premium when essentially ALL the agreements state the DEBTOR (A&O) would not do so?
Mr. M I don't know how you can keep a straight face when you talk about Blue Dymond, Physician's Trust and especially Mr. Stephenson. I don't know what the legal terminology is but I know there is some principle that all lawyers know regarding authority in any contract. I can't say I bought a business by signing a contract with the company janitor-you can't say you wrote a contract between the F. TRIO and someone whose authority you or the F.TRIO had NO idea.
Also, many contracts state that any sale or change of address or venue would cause a prior notice to investors-how could you write a contract that you should have known would void investors rights? Just maybe, Mr. M, you had much more to do with this than you would like to say. You sold insurance policies to A&O and you wrote the sales contract back in August of 2007- yet you act as if you knew nothing about the A&O situation before you became "manager."
We spoke with an attorney regarding a potential lawsuit against the financial adviser's company, since they're responsible for his actions whether they knew what he was doing or not. This attorney advised that if we filed suit before the bankruptcy is settled, we risk that company dragging A & O into the suit, and thus interfering with the bankruptcy. Better to sit tight to see how things are going to end up there, then file once it's settled. The Texas State Securities Board investigator can give more information and insight into this case.
In response to Mr. Thomas's commentary about Investors being able to collect on Agent's E&O insurance. More Agent's E&O converage will not cover the sale of "Private Placements" or "Life Settlements". So Mr. Thomas is mistaken in his original assumptions.
There is new documentation on the trustee's website concerning the November 13 creditors meeting, and proposed election of another trustee. Mr. Collins has filed an objection, and that filing is on the website. The Houston firm apparently wants the fox to guard the henhouse in this matter...
Also, regarding recovery of invested funds, the E & O coverage may not pay off, but according to FINRA, a company is responsible for its agents actions, whether they know about them or not. There is also breach of contract as an issue, when these contracts don't pay off as promised.
In response to Sally Burton's statement that the the company that the agent's worked for would cover the losses of the investors. Ms. Burton most agents if not all of them are individuals and do not work for a "large" company. So there would not be an entity to cover the investors losses. The investors would have to seek action against the agents
personally.
In our case, a licensed securities rep employed with a financial services company sold us our investment. The company he was working for had nothing to do with these life settlement contracts, and were unaware of his activities. According to the State Securities Board here in Texas, they're liable for his activities while employed, whether they knew about them or not. That's where I got my information.
Mr. Agent, would you share with us the A&O material used to recruit such a multi-state sales force? What sales pitch did A&O use to win you over? Did A&O indemnify the salespeople? Which products provide the greatest returns? Who was your direct contact at A&O? Was there any type of pyramid for recruiting salespeople; in other words, did people who recruited salespeople get a piece of the sale? How did A&O convince insurance salespeople to sell securities?
Mr. Agent, I'm looking for a catharsis that may help you sleep better at night. If you plan on responding by professing your innocence, please don't bother- we are not interested in anymore "Mr. Stephensons."
This story keeps getting better and better!
Don't get me wrong I feel very sorry for the investors. My hearts go out to them.
But, this goes to show. If it sound to good to be true. It is!
Hey Bart,
The return was not too good to be true at the time. 10 and 12% were not over-excessive terms at the time of our investments...2006 and 7. People were getting up to and in some cases 20% in the market. I am trying not to even think that I have lost most of my inheritance that my parents worked so hard to acquire. I don't think like a crook so how would I have known this could be fraud? I would like to know what kind of parents these bastards have: is it genetic? They should be taken out of the food chain.
To Class of '74...don't give up yet. If this whole thing goes bust, you may have some legal recourse in all of this. I would definitely talk to legal counsel to see what your options are. We have done so, and like they say, "it ain't over 'til the fat lady sings"...
Well, did everyone get their letter from the Postmaster General today? Looks like mail fraud may be the next charge filed in this mess....Get 'em anyway we can!
To Class of '74... I think it could be genetic. I knew Mr. Wahab's parents very well. His mother is very much the same way he is. She has had more fender benders and claimed whip lash more then anyone I know. She has lived off our goverment system through food stamps and anything else she could lie, cheat, and steal for. For the last 3 years she has lived off disability because she hurt herself at H-E-B where she worked. It's all a big farce. This somewhat tells you how Mr Wahab was raised. She has taught her kids that it is alright to steal and cheat others out of things that are not rightful theirs. She stands by her son today and claims his innocence. It's so very sad. He is what she taught him to be, a arrogant self-absorbent son of a bit*h. FYI... as for the home where she lives today. I'm sure her son purchased it for her. There is no way she could afford it. She has never owned a home until 3 years ago. Humm... is that where some of your money went?